Perspective: Expanding the universe of exploration capital

Perspective Issue Twenty Two - May 23, 2017

Advanced, Quality Exploration is Disappearing…to the Producers!

By: Gary Baschuk, VP Senior Mining Analyst

Another advanced exploration company is disappearing. Eldorado Gold (ELD-TSX) has entered into a definitive agreement to acquire all of the issued and outstanding shares of Integra Gold (ICG-TSX.V) that it does not already hold. Integra has been advancing the Lamaque Project with the high-grade Triangle underground gold deposit containing 1.2 mln oz gold grading 9.24 g/t (Indicated Resource at a 5 g/t cut-off). The total transaction value is approximately C$590 mln providing a 46% premium to Integra shareholders, based on the 20-day VWAP, or a 52% premium based upon the May 12th closing price of $1.13/sh.

The Lamaque property has been around for a long time with gold production commencing in 1935, but the success of Integra illustrates the potential pay-off of exploring in the shadow of headframes. New technology, new geological interpretations and persistent management with a strong shareholder base has once again proven persistence pays off. We believe there will be other examples in the Val d’Or camp. In our comments below, we note that Probe Metals (PRB-TSX.V) has discovered a new north-easterly striking fault containing very high-grade gold. QMX (QMX.TSX.V), adjacent to Probe, also has a large land package, with the property dominated by the Bourlamaque Batholith, a nice brittle deformation target – similar to the past producing Camflo Mine and others in the camp.

The importance of persistence cannot be understated. Every drill hole is a research and development tool which provides information as to the positioning for the next hole, if warranted. I recall the Hemlo discovery from the early 1980’s where once again, persistence paid off.

We expect with aggressive and persistent drill programs, more major discoveries will be made, especially in the vicinity of proven gold camps.


PearTree Spotlight

Agnico Eagle’s Meadowbank Mine

PearTree is proud to feature the Agnico Eagle METC Meadowbank case study video. The Meadowbank open-pit gold mine in the Kivalliq region of Nunavut – approximately 300 km west of Hudson Bay and 110 km by road north of Baker Lake – is Agnico Eagle’s first Low Arctic mine. This Canadian success story originated as a result of METC / flow through financing.

To learn more about the Meadowbank mine, click here.

Analyst Notes

By Gary Baschuk, VP Senior Mining Analyst

Below is a compilation of Selective Press Releases from Canadian Companies released since our last Perspective Issue. For past Analyst Notes please click here.

Equity Research

ATAC Resources Ltd. (ATC-TSX.V)

Barrick Increases Stake to 19.9% with a Focus on Orion – Expect Double the Results in 2017!

2017 is looking to be another exciting year for ATAC. The company plans to spend $10 mln in exploration focussing at Osiris (which includes the high-grade Conrad Zone), while a recent deal with Barrick (ABX-TSX) has the major spending $10 mln over 3 yrs for an earn-in at Orion which includes the Anubis Cluster.

The transaction gives Barrick the right to earn up to a 70% interest in the Orion Project (see map below) by spending a total of approximately $63.3 mln, including an $8.3 mln investment via a structured flow through financing arranged by PearTree.

Source: ATAC Resources Ltd.

The transaction with Barrick is 2-stage:

  1. To earn 60%, Barrick must spend $35 mln in exploration over 5 yrs. This includes spending $10 mln over the first 3 yrs,
  2. Barrick must incur expenses of an additional $20 mln to earn an additional 10%.

As part of the agreement, Barrick will second one or more Senior geologists to the Orion Project to provide technical assistance and expertise.

The agreement breaks the Rakla Property into three segments:

  1. Osiris –302 sq km – includes Osiris, Conrad, Ibis and Sunrise discoveries (100% ATAC)
  2. Rau – 660 sq km – includes Tiger and other early-stage carbonate replacement style gold and base metal targets (100% Atac), and
  3. Orion – 780 sq km – Orion, Anubis drilled Carlin-type discoveries in addition to eight other Carlin-type gold prospects (subject to the Barrick earn-in up to 70%)

We believe 2017 will be a transitional year for ATAC. Past results from Conrad propelled the value of the company skyward, and we can expect similar results again this year from the same area. In addition, Barrick will be drilling on the Anubis Cluster, a series of Carlin-type deposits, with stacked favourable host units – both slope facies carbonaceous, calcareous sediments of Neoproterozoic and Paleaozoic ages.


Nighthawk Gold Corp. (NHK-TSX.V)

Indin Lake Project Preliminary Metallurgical Tests Yield up to 96.5% Recovery and Graduation to TSX

Preliminary metallurgical testwork on samples from the Colomac Gold project have yielded gold recoveries of up to 96.5%, substantially higher than the historic 88.1%. Nighthawk tested three core samples of quartz diorite from various parts of the deposit. Each was assayed and subjected to grindability tests. A master composite from the three samples was created and tested for recoveries using various proven, standard techniques.

Each of the samples yielded similar specific gravity and Bond Work Index results.

Source: Nighthawk Gold Corp.

A master composite sample was created from the South and Deep Zones (due to their higher grade) with a head grade assaying 1.81 g/t gold. The variation of grade, higher than the original individual samples, indicates a coarse gold fraction (as illustrated by the screen metallic vs fire assay results) which we expect may lead to higher recoveries from the leach testwork. Sample particle size and recoveries are listed below for each of the test types.

Source: Nighthawk Gold Corp.

The grind testwork yielded encouraging initial recoveries with no reported deleterious materials. Flotation results appear fairly uniform despite grind size while gravity results show more variability.  Cyanide leaching yielded high recoveries even for the coarse (12.7 mm) fraction (81.8%) and combined with gravity yielded 96.5% recovery.

The Company plans additional testwork including that from higher grade areas (e.g. Zone 1.5) which is to be drill-tested during the current program.

We are encouraged by the initial results. Consistency of physical properties from the three areas can simplify the grinding circuit and the good recoveries, often exceeding historical results, are all positive parameters for Nighthawk to build upon. We expect additional testwork to be conducted upon completion of this years 25,000m drill program with final metallurgy expected by Q4/17.

The Indin Lake Property is large (over 222,000 acres) with a number of untested drill targets plus good geophysical anomalies that require additional work.

Armed with over $35 mln in cash, we expect Nighthawk to have an aggressive exploration and drill program for the 2017 season.

In addition to the positive metallurgical results, Nighthawk has received conditional approval from the Toronto Stock Exchange (TSX) to graduate from the Venture Exchange to the TSX using the same NHK ticker symbol.


First Mining Finance Corp. (FF-TSX.V)

Infill Drilling Hitting Big at Goldlund

Assay results have started rolling in from First Mining’s Goldlund Project. The Company is in the midst of a 106 hole, 28,500m infill drill program aimed at converting the Inferred Resources to Measured and Indicated (M&I).

Goldlund currently hosts a pit-constrained M&I Resource of 560,000 oz contained in 9.3 mln tonnes at a grade of 1.87 g/t gold using a 0.40 g/t cut off. In addition, the pit-constrained Inferred Resource contains 1.75 mln ounces gold in 40.9 mln tonnes at a grade of 1.33 g/t gold (also using a 0.40 g/t gold cut-off).

Highlights from the infill program (uncut and of core lengths) include:

  • GL-17-044: 2.14 g/t gold over 26.0m including 18.43 g/t gold over 2.0m,
  • GL-17-021: 2.21 g/t gold over 52.0m including 43.09 g/t gold over 2.0m,
  • GL-17-017: 0.90 g/t gold over 62.0m including 12.74 g/t gold over 2.0m,
  • GL-17-084: 4.30 g/t gold over 34.0m, including 48.72 g/t gold over2.0m,
  • GL-17-105: 1.90 g/t gold over 10m including 9.14 g/t gold over 2.0m, and
  • GL-17-071:  0.97 g/t gold over 45.2m including 1.26 g/t gold over 30m.

In total, 65 holes have been drilled and assays have been received and released from 23 drill holes (as of May 2nd).

Source: First Mining Finance Corp.

Gold mineralization is hosted in a granite and occurs as fine disseminations in quartz vein stockwork and as coarse clots up to 2mm associated with pyrite in quartz veins.

Source: First Mining Finance Corp.

First Mining is gearing up for a busy exploration season with 50,000m of drilling planned at their properties and news flow is expected to pick up as the summer progresses.



Auryn Resources Inc. (AUG-TSX)

Committee Bay Gold Project Firing Up for the Season

In preparation for a 25,000m drill program, crews have begun mobilizing equipment and fuel to the Committee Bay Gold Project located in Nunavut. The program will focus on newly identified targets at Anuri, Four Hills, Three Bluffs and Inuk corridors. In addition, a regional till sampling program is planned to assist targeting additional prospective areas on the 120km long Gibsons MacQuoid Property for the drill 2018 season.

Source: Auryn Resources Inc.


Probe Metals Inc. (PRB-TSX.V)

Val d’Or East Hitting High-Grade Gold

Positive drill results from the Val d’Or East Property in Quebec has prompted Probe to increase the drill program from 50,000m to 75,000m. Success from the drill bit includes the discovery of a north-easterly trending, sub-vertical structure containing very high-grade gold intercepts, including 1,122 g/t gold over 0.7m from hole PC-17-100 (previously released) and 154.4 g/t gold over 0.6m from hole PC-17-124. The structure has been traced for over 300m in strike and to a vertical depth of 400m and remains open in all directions. A recent Induced Polarization (IP) survey identified a resistivity anomaly trending north-easterly from the Beliveau Deposit southward (although with apparent sinistral movement along an intervening fault).

Drilling along the Cadillac-Larder Lake Break was typically oriented south to north to intersect the break and parallel splays which commonly hosted the gold mineralization. Turning the drills 90 degrees to test more northerly trending structures is anticipated to better define the new discovery.

Source: Probe Metals Inc.

Source: Probe Metals Inc.

Typical gold mineralization at Beliveau is hosted in quartz-pyrite-tourmaline veins in mafic volcanics or a diorite. The veins are moderately dipping, stacked sets oriented east-west. We believe the new discovery has the potential to contain significant gold mineralization as structures perpendicular to regional faults often occur as parallel sets (Riedel fracture systems) providing room for new discoveries.

Highlights from the recent drilling (in core lengths) include:

  • PC-17-106: 5.7 g/t gold over 4.1m at New Beliveau (NB),
  • PV-17-108: 3.1 g/t gold over 10.0m including 35.6 g/t over 0.5m (NB/dyke),
  • PC-17-109: 7.5 g/t gold over 3.5m (NB),
  • PC-17-110: 4.6 g/t gold over 3.2m (NB/dyke) and
    • 5.9 g/t gold over 2.9m (NB),
    • 7.9 g/t gold over 2.7m (NB) including 28.7 g/t gold over 0.8m.
  • PC-17-112: 9.0 g/t gold over 2.7m (NB) and
    • 5.1 g/t gold over 5.1m including 13.9 g/t gold over 1.8 (NB)

With the Majors and mid-caps searching for new, potential long-life projects in safe jurisdictions, we believe Probe with their large land package in Val d-Or and further north along the Lower Detour (Grasset) Deformation Zone may check the boxes for a number of firms.


Barkerville Gold Mines Ltd. (BGM-TSX.V)

Shaft Zone Reveals New, High-Grade Stockwork

Barkerville’s accelerated drill program at the Cariboo Gold Project, now with four drill rigs in the Valley Zone, continues to yield high-grade intercepts. The property, located in south-central British Columbia, is subject to a 130,000m Phase II drill programme which is improving the understanding of mineralization while also discovering new Stockwork vein systems. Barkerville released a slew of press releases highlighting high-grade gold intercepts from a variety of locales combined with the discovery of new Stockwork zones.

At the Island Mountain Shaft Zone, a new, high-grade, wide interval of gold mineralization was intersected in hole IM-17-072. The intercept returned 19.20 g/t gold (uncut) over 54.40m (core length). The interval included of a number of narrow, multi-ounce intersections including:

  • 272 g/t gold over 0.50m,
  • 760 g/t gold over 0.85m,
  • 2 g/t gold over 0.50m,
  • 8 g/t gold over 0.50m, and
  • 4 g/t gold over 1.50m.

Mineralization is reportedly 250m below surface hosted in silicified and pyritic sandstone cut by quartz stringers/veins. The zone remains open for expansion.

Source: Barkerville Gold Mines Ltd.

Drill hole IM-17-072 also intersected mineralization grading 25.00 g/t gold (uncut) over 2.85m (core length) 25m below surface, 16.55 g/t gold (uncut) over 5.45m (core length) 100m below surface, and 9.41 g/t gold (uncut) over 3.30m (core length) 110m below surface.

As shown in the illustration above, drill hole IM-17-078 intersected gold mineralization 180m below the intercept in hole IM-17-072. The interval returned 11.42g/t gold (uncut) over 28.55m (core length). The mineralization is similarly hosted in the sandstone stratigraphic unit and occurs at a vertical depth of 420m below surface.

Deeper drilling at the Shaft Zone expanded the potential extent of mineralization in the footwall zone. Hole IM-17-101 intersected three vein sets with the latter two new discoveries. The new discoveries tested an area believed to be below the sandstone contact but intersected high grade gold over good thicknesses in an area where the sandstone host unit appears to widen. The intersections (uncut assays over core lengths) in the new vein zone include:

  • 13.31 g/t gold over 11.00m and
  • 7.60 g/t gold over 11.75m.

Further up-hole in the Shaft Zone an intersection of 12.48 g/t gold over 3.75m was intersected.

Source: Barkerville Gold Mines Ltd.

In addition to the holes drilled near the Shaft Zone, Barkerville drilled five holes along strike further to the northwest within the Mosquito Creek Mine. Mineralization was intersected in all holes, except IM-17-073 which was abandoned, returning generally narrow intervals of good grade mineralization.

Source: Barkerville Gold Mines Ltd.

Barkerville continues to drill test the strike length of the mineralized zones with four rigs currently in the Valley Zone, three rigs on Island Mountain and an additional rig testing for deep mineralization below the former Aurum and Cariboo Gold Quartz Mines.

Other drill results released include intersections from Mosquito Creek, the Shaft Zone and the Valley Zone.

Highlights (uncut assay results and core lengths) from drilling at Mosquito Creek include:

  • IM-17-045: 7.96 g/t gold over 3.75m and 14.01 g/t gold over 5.25m,
  • IM-17-050: 12.60 g/t gold over 6.00m,
  • IM-17-053: 7.89 g/t gold over 3.30m and 11.03 g/t gold over 3.80m,
  • IM-17-054: 6.99 g/t gold over 3.10m, and
  • IM-17-056: 4.42 g/t gold over 1.50m,
  • IM-17-061: 39.30 g/t gold over 0.90m, 9.41 g/t gold over 1.75m and 6.92 g/t gold over 2.50m,
  • IM-17-081: 23.31 g/t gold over 7.80m at 280m vertical and 7.43 g/t gold over 2.00m at 400m vertical.

Additional results (uncut assay results and core lengths) from the Shaft Zone include:

  • IM-17-047: 20.93 g/t gold over 1.15m and 16.53 g/t gold over 1.80m,
  • IM-17-049: 7.73 g/t gold over 8.35m,
  • IM-17-058: 31.22 g/t gold over 7.50m (80m below surface),
  • IM-17-063: 15.04 g/t gold over 8.05m
  • IM-17-060: 8.21 g/t gold over 3.75m (located 75m down-dip from IM-17-058)
  • CM-17-012: 6.52 g/t gold over 5.85m from a new zone at 310m vertical and also 10.15 g/t gold over 0.85m from 400m vertical (deepest intercept and new vein system)
  • IM-17-068: 14.10 g/t gold over 20.00m at 400m vertical depth (reportedly no other drill holes within 150m) and also 7.76 g/t gold over 10.45m at 80 m vertical.
  • M-17-085: 13.63 g/t gold over 14.55m at 280m vertical.

Highlights (uncut assay results and core lengths) from the Valley Zone include:

  • CM-17-012: 10.35 g/t gold over 7.85m and also 6.62 g/t gold over 5.85m

With the accelerated drill program conducting infill drilling, testing new areas and deeper targets, we expect regular news flow with continued high-grade intercepts from this nuggetty gold camp. Note that these types of deposits typically require tighter spaced drilling to define resources and the high-grades encountered within the veins are appearing to shown some continuity.

Press releases with figures illustrating drill hole intercept locations are noted below:

Apr 5:

Apr 11:

Apr 12:

Apr 17:

Apr 26:

May 3:

May 9:


Important Information and Legal Disclaimers

This report has been prepared for general information purposes only and should not be considered either a solicitation for the purchase or an offer of securities. This research report does not constitute a recommendation. The securities mentioned in this report may not be suitable for all types of investors. The information contained in this report is not intended as individual investment advice and is not designed to meet any particular investment objectives, financial situations, or needs. Nothing in this report constitutes legal, accounting or tax advice.

Information, opinions and statistical data contained in this report were obtained or derived from sources believed to be reliable, but its accuracy cannot be guaranteed. PearTree Securities Inc. (“PT Securities”) and/or its affiliates and/or any of their respective officers, directors, and representatives (collectively “PearTree”) does not represent that any such information, opinion or statistical data is accurate or complete (with the exception of information contained in the Important Disclosures section of this report provided by PearTree or individual research analysts). Any opinions or analysis herein reflect the views of the Analyst as at the date appearing above, and are subject to change without notice. The Analyst writing the report is not a person or company with actual, implied or apparent authority to act on behalf of any issuer mentioned in this report.

PearTree may, in exchange for remuneration, participate in the financing of companies mentioned in this report. PearTree analysts are salaried employees who may receive a performance bonus that may be derived, in part, from corporate finance income. PearTree and members of their families may hold positions in the companies mentioned in this report and may buy and/or sell these stocks on the market or otherwise.

PearTree shall not be held liable for any loss or damage resulting from the use or the implementation of the information contained herein, except to the extent that liability may arise under specific statutes or regulations applicable to PearTree. The investments to which this report relates can fluctuate in value.

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Analyst Certification

I, Gary Baschuk, hereby certify that the views expressed in this report accurately reflect my personal views about the subject and the issuer.


Important Disclosures

Of the companies included in the report the following Important Disclosures apply:

Ticker Company 1 2 3 4 5
ATC-TSX.V ATAC Resources Ltd. x
AUG-TSX Auryn Resources Inc.
BGM-TSX.V Barkerville Gold Mines Ltd. x
ABX-TSX Barrick Gold Corp. x x
ELD-TSX Eldorado Gold Corp.
FF-TSX.V First Mining Finance Corp.
ICG-TSX.V Integra Gold Corp. x
NHK-TSX.V Nighthawk Gold Corp. x
PRB-TSX.V Probe Metals Inc. x
1 The Analyst(s) preparing this report (or a member of the Analyst’s household) have a financial interest in this company.
2 PearTree has managed or co-managed or participated as selling group in a private placement for the issuer’s in the past 12 months.
3 As of the end of the month immediately preceding the date of issuance of this research report or the end of the second most recent month if the issue date is less than 10 calendar days after the end of the most recent month, PearTree collectively beneficially owned 1% or more of a class of the issuer’s equity securities.
4 PearTree has visited projects of the issuer and a portion of the expenses for this travel may have been reimbursed by the issuer.
5 PearTree, the analyst or an associate of the analyst responsible for this report or any individuals directly involved in the preparation of this report hold or are short the issuer’s securities directly or through derivatives.
The research analyst is not aware of any other material conflict at the time of publication.

This newsletter is dedicated to providing insight and analysis on Canadian mineral exploration and development stories. We welcome your feedback.

PearTree Securities is the largest provider of mining flow through capital in Canada. As an exempt market dealer and portfolio manager, PearTree Securities has approximately $250 million available for investments annually.

Upcoming Conferences & Events

Mackenzie Health Ride for Health in Kleinburg – June 4, 2017

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Mining Matters Rock Cycle Ride for Minerals Education in Toronto – June 15, 2017

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Precious Metals Summit in Beaver Creek, CO – September 18-20, 2017

Denver Gold Forum in Colorado Springs, CO – September 24-27, 2017

Mines and Money Toronto – October 2-4, 2017

Contact Us

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Gary Baschuk
VP Senior Mining Analyst
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